Ultra Petroleum (UPL) PriceWatch Alert for November 16, 2009

Posted: Monday, November 16, 2009 8:06 AM EDT
By: Market Intelligence Center Staff

Ultra Petroleum (NYSE: UPL) ended the last trading session at $46.01. So far the stock has hit a 52-week low of $28.85 and 52-week high of $57.21. Ultra Petroleum stock has been showing support around 44.40 and resistance in the 48.24 range. Technical indicators for the stock are Bearish and S&P gives UPL a positive 4 STAR (out of 5) buy rating. UPL appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Mar '10 47 covered call (UPL CW) for a net debit in the $41.81 area. That is also the break even stock price for this trade. This covered call has a 124 day duration, provides 9.13% downside protection and a 12.41% assigned return rate for a 36.54% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the UPL Jan '11 25 Call (OZH AE) and selling the Mar '10 47 call (UPL CW) for an $18.45 debit. The trade has a 124 day life and would provide 5.56% downside protection and a 19.24% assigned return rate for a 57.00% annualized return rate (for comparison purposes only). Ultra Petroleum does not pay dividends at this time. [ABR-Seven Summits Research]